Whenever you hear about a "prime bank" investment
opportunity, walk away. A prime bank opportunity generally is described by the
sponsor as an international investing program involving complex financial
instruments that are too technical and complicated for non-experts to understand.
If it's too technical for you to invest why would you? - Astronomical returns
are promised in exchange for secrecy about this lucrative international banking
The SEC's case against Frank L. Pavlico and his firm, The
Milan Group, was just another prime bank scheme. It caught my eye because the
SEC also brought charges against a lawyer involved in the scheme, Brynee K.
What kept my attention was this quote from Stephen L.
Cohen, Associate Director of the SEC's Division of Enforcement:
"Pavlico and Baylor produced paperwork dotted with
legal-sounding gibberish designed to deceive investors into believing this is a
highly-sophisticated investment opportunity."
And in the complaint:
"These documents were legal-sounding gibberish dotted
with meaningless legal and financial terms that were designed to deceive
investors into believing they were participants in a legitimate investment."
A complaint by one
of the deceived investors (.pdf) lays out what the scheme was offering. if
the investor would deposit $325,000 into Baylor's trust account Milan would
provide a leased instrument with a value of $10 million. This would then be
monetized and the resulting funds would be used to acquire a larger instrument.
These are just allegations, nothing has been proven and
the defendants have not settled the charges.
additional commentary on developments in compliance and ethics, visit Compliance Building,
a blog hosted by Doug Cornelius.
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